A fixed annuity is a vehicle that allows you, the annuitant, to deposit a lump sum that then generates a fixed rate of return for a set period. Both the principal balance and the interest rate are guaranteed by the insurance company issuing the contract, which provides a degree of stability for conservative investors or savers. Because the interest rate offered on a fixed annuity is often higher than conventional savings vehicles, a fixed annuity may be appropriate for long-term retirement savings goals.

The Mechanics of a Fixed Annuity

Fixed annuities are the most conservative of all annuity options given they function similar to a certificate of deposit. Once a deposit, or premium, is paid, the issuing annuity company sets the guaranteed interest rate for a period selected by the account holder at the time the contract is signed, ranging from one to several years. The interest rate does not change for the guaranteed period, but once that ends, the interest rate may adjust up or down based on current interest rates.

Fixed annuities may be deferred or immediate, depending on your needs. With a deferred annuity, you are delaying annuity income until a future date – usually one year or more from the initial contract date. While the fixed annuity remains deferred, interest accrues at the contracted rate. When income is needed, the annuity company will determine the guaranteed income amount based on your age and account value.

An immediate annuity is also a fixed annuity, but instead of paying a CD-like interest rate for a number of years, the annuity company starts paying out guaranteed income within one year. The income amount is similarly based on your age and account value, but the interest rate provided on an immediate annuity is less than what a deferred fixed annuity may offer.

Benefits of Fixed Annuities

The most apparent benefit of a fixed annuity is the protection against loss of principal, without the concern of market volatility. Fixed annuity contracts are not tied to an investment portfolio like indexed or variable annuities, but instead, offer a set interest rate that is backed by the issuing insurance company.

In addition to stable returns, fixed annuities also offer tax deferral for non-retirement funds. You have the option to purchase a fixed annuity outside the confines of a retirement account, like a traditional IRA, and in doing so, you achieve tax-deferred growth of your funds. You will, however, pay taxes on the interest earnings from a fixed annuity when the money is withdrawn as income or as a lump sum.

Fixed annuities also have low minimums, ranging between $1,000 and $10,000 depending on the issuing insurance company. Both immediate and deferred fixed annuities also offer annuitization options which guarantee income for your lifetime or a set period you select.

Considerations for a Fixed Annuity Purchase

A fixed annuity can be a suitable option for those looking for low-risk investment options that have the ability to generate fixed income now or in the future, but there are caveats to consider. First, fixed annuity interest rates are only set for a specific timeframe, after which they typically decrease. If the new interest rate is not amenable to your overall investment goals, it may be difficult to transition your funds to another savings vehicle. This is because fixed annuities, like indexed and variable annuities, come with surrender charges that may impede your ability to move the balance without paying a penalty.

A fixed annuity also comes with some risk, specifically in terms of interest rates and inflation. Locking into a fixed annuity during a low interest rate market may mean you give up the opportunity to secure a higher rate of return when interest rates are on the rise. In these scenarios, a fixed annuity may not keep up with inflation, leaving you with less purchasing power than you anticipated. And while fixed annuities do offer peace of mind given the set interest rate they provide, you do not have the opportunity for higher returns which may be available through other investment options, like stocks, bonds, or funds.

Fixed annuities are a sound method to achieve guaranteed growth of income based on a set interest rate, and they offer more stability than indexed or variable annuities might. However, it is important to understand how fixed annuities work along with the opportunity costs and risks involved before utilizing this vehicle as a retirement savings tool.

When it comes to selecting a location to retire, there are many different variables to consider. Though many cities in the United States are specifically set-up with appeals to retirement communities, everyone has different needs their looking to meet. Whether you’re interested in finding a tax haven, or keeping a low cost of living, or enjoying plentiful outdoor activities, the right retirement location is out there for you.

The most common variables when selecting a retirement location are:

1. Weather
2. Tax Requirements
3. Recreational Opportunities

Let us take the hard work out of finding your dream retirement location. Here are some of the best places to retire based on the most commonly selected needs.

Weather

When you come to the age of retirement, the weather is no longer a topic used to fill a void in a conversation, but a crucial part of where you choose to live. With less time spent in the office and more time spent at home or enjoying your surroundings, ensuring that your location is suited to your weather needs is an important decision. Whether you’re a snow bunny interested in skiing the slopes, you enjoy the colors of the leaves changing in the fall, or you enjoy summer weather all year long, the right place is out there for you!

For the warm weather lovers, there are a variety of different options for you. From California beaches, the Gulf Coast, or the even the South, there are plentiful retirement cities around. One of the challenges you’ll find with this location is the cost of living.

Naples, Florida

With a staggering 51% of the current population over the age of 65, this prime coastal location, 40 miles south of Fort Myers, Florida is undoubtedly at the top of our list. Naples, Florida is full of high-end shopping, numerous beach locations, and ideal weather year-round. The city is full of beautiful landscapes and ecosystems with an appeal for animal watching, as it’s home to dozens of species. With over 60 golf courses throughout Naples, along with an entire Art Association, the recreational activities are plentiful.

Quick Facts:

• Temperature – Between 53 and 93 degrees
• Median Age – 65.6 years
• Cost of Living – 21.6% higher than the U.S national average
• Median Home Price – $334,900
• Median Income – $80,571

New Orleans, Louisiana

Ranked one of the best places to retire, New Orleans was found to have a great balance of affordability, recreational opportunities, and the opportunity for fabulous weather the entire calendar year. The first thought you have of New Orleans might well be the parties and Bourbon Street. However, there are plenty of opportunities for retirement age individuals as well. A rich culture and plentiful food options coupled with active senior organization make New Orleans a wonderful retirement opportunity.

Quick Facts:

• Temperature – Between 45 and 90 degrees
• Median Age – 35.9 years
• Cost of Living – 7.5% higher than the U.S national average
• Median Home Price – $186,000
• Median Income – $36,964

Portland, Maine

Maine’s largest city, Portland is ranked one of the best places not only to retire, but to live in the US. With beautiful seaside views and a relatively affordable price point, Portland has many opportunities for retirees. Home to two art colleges, two 5-star hospitals, and an international airport, Portland just about has it all. Maine also offers retirees a tax deductible of up to $10,000 as another added benefit.

Quick Facts:

• Temperature – Between 31 and 78 degrees
• Median Age – 36 years
• Cost of Living – 16.2% higher than the U.S national average
• Median Home Price – $305,200
• Median Income – $45,865

Charleston, South Carolina

Ranked numerous times for its extensive livability, Charleston is a beautiful waterfront location that hosts year-round warm weather. With extensive outdoor opportunities and seasonality, this character-filled city is definitely full of charm.  Home to over a dozen golf courses, museums, and biking paths, remaining active during your retirement will be made easy in this lovely southern town.

Quick Facts:

• Temperature – Between 38 and 91 degrees
• Median Age – 34.4 years
• Cost of Living – 21.5% higher than the U.S national average
• Median Home Price – $313,700
• Median Income – $52,971

Tax Havens

Generally, when you get to the age of retirement, you also have a fixed income. That might be a matter of concern, however it doesn’t have to be. There are many different states that offer tax benefits for retirees, or simply states that don’t have taxes. Don’t be mistaken, there are very desirable places to live among those states, take a look at a dew of the most popular and highly recommended locations.

Savannah, Georgia

A moderately sized town, Savannah is both coastal and modern. With a high level of historical integrity at the core and a booming industrial center, the culture of this town is unique. From outstanding heath care to vast shopping opportunities, this tropical city has much to offer. Whether you’re looking for an urban vibe or a coastal paradise, Savannah is able to suit either need. Recreational opportunities are not scarce in the city, as there are over a dozen recreational centers, several golf courses, and hundreds of miles of water. In relation to the tax status, Georgia does not tax Social Security and also provides deductions of over $60,000 on retirement income.

Quick Facts:

• Temperature – Between 39 and 92 degrees
• Median Age – 32.3 years
• Cost of Living – 12.1% lower than the U.S national average
• Median Home Price – $134,000
• Median Income – $36,628

Pittsburgh, Pennsylvania

Though the weather might be an initial fear of moving to a city like Pittsburgh, it still maintains its number one spot on places to retire. With a low cost of living and a low rate of crime, this heath care hub is an ideal place to retire. One of the most important things to consider when looking at a place to retire is healthcare, something that Pittsburgh is well-known for. Pennsylvania does not tax Social security income, one of two states on the East Coast that allows for all pension income to be completely ta exempt.

Quick Facts:

• Temperature – Between 21 and 83 degrees
• Median Age – 32.9 years
• Cost of Living – 5.8% lower than the U.S national average
• Median Home Price – $146,800
• Median Income – $40,009

Recreational Opportunities

The importance of recreational opportunities during retirement stretch further than overall satisfaction. An increase in social activities lead to better cognitive function, maintenance of emotional and physical health, and a longer and happier life. Whether you’re joining a club, volunteering, or engaging in outdoor sporting events, finding an activity that you enjoy is crucial to your quality of life in retirement

Denver, Colorado

Colorado is one of the best places to retire, with Denver coming in as one of the top spots in the state. With a beautiful landscape of mountains and trees, outdoor activities are plentiful in this city. Rated one of the healthiest communities due to its outdoor activities, Denver is home to hiking, biking, skiing, and other leisurely activities. With a walk score above 60, new retirees will have no challenge in finding activities to occupy their time.

Quick Facts:

• Temperature – Between 18 and 90 degrees
• Median Age – 34.4 years
• Cost of Living – 44.2% higher than the U.S national average
• Median Home Price – $421,900
• Median Income – $51,800

Scottsdale, Arizona

Over 23% of the community in Scottsdale are over the age of 65, this city is already a retirement safe haven. With over 3 million acres of landscape, there are options for hiking, fishing, biking, and all other kinds of outdoor activities. Scottsdale also is home to over 30 parks and the McDowell Sonoran Preserve that allows hundreds of miles of hiking and horse trails. Dozens of golf courses line the city of Scottsdale, which people from all over the world travel to play.

Quick Facts:

• Temperature – Between 40 and 100 degrees
• Median Age – 46.9 years
• Cost of Living – 48.7% higher than the U.S national average
• Median Home Price – $483,500
• Median Income – $72,455

Annuities offer a variety of benefits to individuals gearing up for or in retirement, not the least of which is a guaranteed income stream that one cannot outlive. That income stream, and in some cases, the account value of an annuity are based on the underlying rate provided by the issuing insurance company. To understand how annuity rates are calculated starts with recognizing the three major components that come into play: the investment performance of the annuity company, the broad interest rate environment at the time of purchase, and the term of the annuity.

Let’s take a closer look at each aspect of an annuity rate calculation.

Annuity Rates Explained

Company Investment Performance – the companies issuing annuity contracts are able to pay fixed interest rates on deposit, and therefore guarantee income in the future, because they have the ability to generate a return on funds used to purchase annuities. Deposits from annuity purchases are often invested in a diversified portfolio. The investment mix of annuity company portfolios may include high-yield bonds, preferred stock, and other institutional-level investments that provide a relatively stable return over time. The stronger this performance, the more competitive the rate offered to new annuity contracts.

Broad Interest Rates – while annuity companies take some risk with their investment portfolios, they also take a close look at the current interest rate environment when issuing annuity rates. The movement of long and short-term interest rates has an impact on the performance of the company’s portfolio, especially if a significant amount of annuity deposits are invested in the bond market. If annuity issuers aren’t correct in their assumptions about interest rate movements, up or down, this could create a lower return on their portfolio. This results in a lower interest rate offered on annuity contracts moving forward. The opposite is also true; when performance is strong, interest rates offered on annuity deposits are higher.

Annuity Terms – the amount of time a deposit is held in an annuity influences the annuity rate as well. The longer the term, the higher the interest rate offered, and vice versa. This is because annuity companies have a longer period to invest the annuity deposit in their own portfolio. For annuities that pay a guaranteed stream of income, time also plays a role. An immediate annuity offers a lower rate because income is starting shortly after the funds are deposited. A deferred annuity often pays a higher rate, as income begins a year or more in the future.

There is a fourth component of annuity rate calculation – the deposit amount. Some annuity companies offer a higher annuity rate for more substantial deposits, while others provide the same annuity rate regardless of the amount used to fund an annuity. It is important to know that while this isn’t always a factor, it can play a role in calculating your annuity rate.

Having a basic understanding of the factors that influence how annuity rates are calculated is an essential step in selecting the best-fit annuity for you and your financial needs.

Exercise is important at any stage of your life, but most staying active becomes more important as you age. There are significant health benefits that comes with remaining active into your retirement. As we grow, we become less active, with many of the people retirement age and above having almost no exercise or physical activity at all. Exercising can increase your ability to live independently and can even reduce your fall risk. Experts agree that daily exercise leads directly to extending your lifespan and improving your mental health. While more vigorous activities might not be possible at the age of retirement, there are many different exercises that you can do to increase your physical activity.

Let’s take a look at some of the top exercises for seniors and see which are appealing to you!

Top Exercises

• Swimming
• Walking
• Dancing
• Yoga
• Fitness Classes
• Cycling
• Bodyweight training

Regardless of what your prior exercise experience has been, any of these physical activities are possible with little to even no training. Maybe one of your passions is on this list, or maybe something you’ve always wanted to try. Step out of your comfort zone or relive your sport star past. Finding an activity that you can accommodate into your life is extremely important. Most of all, choose something you enjoy doing!

Swimming

There is a reason that swimming is on the top of our list of best activities for seniors, in that it’s an ideal workout. With very little risk of injury, and a low stress environment, there are so many opportunities to work swimming into your routine. Water workouts focus on all the major muscles without the strain of walking, or other activities outside of the pool. Along with the low impact, there are specific health benefits that swimming can provide you:

• Increases flexibility
• Improve muscle strength
• Reduced risk of Osteoporosis

Walking

One of the most prevalent forms of exercise, this can be incorporated extremely easily into your everyday life. Whether you change your form of transportation to walking more often than driving or taking public transit, or simply enjoy a stroll in the park, adding walking to your schedule is a breeze. While there is more impact in walking than swimming, there are no required materials needed, and it can be completed wherever you are! Retiring in a location with good weather, can encourage and even increase the amount of walking that you do, if there are more interesting sites to see. Some of the specific health benefits associated with walking are:

• Improves Cardiovascular health
• Boosts your immune system
• Prevents and reduces Arthritis pain

Dancing

Not only a fun exercise, but an effective health benefit as well, dancing is one of the most energizing activities on this list. Nothing makes you want to exercise more than an activity that you can laugh and enjoy doing. There are many different ways that you can incorporate dancing into your routine. Whether you’re dancing by yourself, as a part of an exercise class, or even out for dance lessons, there are countless options for dancing no matter where you live. Find a style that’s right for you and get your groove on! Don’t let the fun fool you, dancing has many health benefits as well, including:

• Minimizes symptoms of Depression
• Reduces joint pain and stiffness
• Defends against Dementia

Yoga

One of the most intimidating exercises to begin as an adult is yoga. You see people standing on their heads, holding poses for long periods of time, and even balancing on one leg. Don’t worry, not all yoga requires defying gravity. Beginners yoga is a great activity to remain active and reduce your level of stress. Equate this exercise to mild stretching and a relaxation technique. Many retirement communities or gyms have beginning yoga classes with instructors willing to show you the ropes. Some of the benefits of adding yoga to your routine are:

• Increased flexibility
• Reduces anxiety and stress
• Promotes good bone and joint health

Fitness Classes

This is one of the exercises that requires access to a gym or recreation center, many retirement communities have access to these amenities. Local gyms may have senior discounts as well, to allow participation in fitness classes. From Zumba to water aerobics, beginner yoga to pilates, there are many fitness classes to try. The fun of this workout is you never have to do the same thing twice, you can also do this with your spouse, a group of friends, or some friendly new faces. With varying times throughout the day, fitness classes are a great opportunity to stay active through your retirement. Not only does this workout provide health benefits, but an added social aspect as well allows for an increase in social conversation, decrease in stress, and benefitted moods.

Cycling

There are a few different ways that you can incorporate cycling into your exercise regime. While not recommended for beginners, outdoor flat roads are ideal biking for seniors, as there is a reduced impact on the joints. Outdoor biking also allows you the opportunity to get outside and can even act as a method of transportation. For those who are either beginning bikers or uncomfortable riding outside, stationary bikes are plentiful at rec centers, private gyms, and even retirement community amenities. This low-impact form of cardio is a great way to stay active, with a low-risk of injury and different levels for everyone.

Bodyweight Training

Many of the discusses exercises above are considered bodyweight training, however there are circuits and other exercises you can do to increase muscle. When gym equipment seems daunting, or you have no access to any other form of exercise, here are some beneficial exercises you can do to help increase your mobility and build and keep muscle.

• Chair Squats – one of the most functional exercises, this strengthens the lower body and your core. Simply stand and sit in a chair, then repeat.
• Wall Push-ups – improve your upper body strength with this exercise. Stand arm’s length away from the wall, bend your elbows diagonally until your heels come off the floor, then push your hands to return to the start position.
• Arm and Leg Raise – strengthen your core with this workout. On your hands and knees, raise the right arm and the left leg at the same time, hold, then repeat with the left arm and the right leg.